In Australia in 2000, for every job in the public sector there were 3.2 private sector jobs. In 2013, for every public sector job there are now 2.5 private sector jobs.
Between 2000 and 2013 the number of people employed in the private sector grew by 20 per cent — from 6.7 million to 8.2 million people. Over that time the number of people employed by the public sector grew by more than 60 per cent — from 2.1 million to 3.3 million people.
In this context the public sector is counted as federal, state, and local government and certain industries where there is government ownership, or substantial government subsidy, or direct price regulation by the government. So for these purposes the public sector includes government employees, and employees in education, healthcare, social assistance, arts and recreation, and some utilities.
I anticipate in coming years the situation will only get worse.
The two ''reforms'' Julia Gillard wants to fight the federal election on are her plans to increase spending on school education by $14 billion over the next six years and the creation of a National Disability Insurance Scheme which, when fully implemented, could cost the government an additional $10 billion a year. Both ''reforms'' will add thousands of employees to the government payroll.
Even those additional teachers, nurses, and care givers employed by private schools and non-government agencies as a result of these reforms will nevertheless have their wages heavily subsidised by government.
Since the global financial crisis in 2008, private sector jobs in Australia have increased by 279,000, while public sector jobs have increased by 406,000. Australia still has a relatively low unemployment rate (at least compared with the US or Europe) of 5.6 per cent only because of the growth in public sector jobs and a decline in the number of people looking for work.
There have been many explanations for this country's declining productivity. No one has yet mentioned what's obvious. Productivity could be falling because there are too many public sector employees implementing efficiency-sapping government initiatives, and on any measure the private sector is more productive than the public sector.
Measuring the size of government but comparing government spending to a country's gross domestic product is a very blunt way of gauging the dead hand of the state. For one thing it doesn't consider the composition of government spending. Spending on public infrastructure has a different impact on the economy than spending on public servants' salaries.
Public servants are dependent on the people who generate the wealth who can then pay taxes which allow those public servants to be paid.
But it's worse than that.
For one thing, more public servants means more red tape and more restrictions on the private sector. More public servants also means more regulation of the public service itself.
What's happened in the Queensland Department of Health is a good example of what happens as public service numbers increase. Campbell Newman has been attacked for cutting 1500 jobs from the department. More than 80,000 people work in the department. Over the past 10 years the department grew by more than 32,000 employees. The number of nursing positions increased by 65 per cent. But the number of managers and clerks increased by more than 100 per cent.
We shouldn't forget that public servants are voters, too, and they tend to vote for political parties which tend to promote the ideals of larger government.
In recent years a lot of attention has been given to the ''dependency ratio'', which measures the working age population against the number of dependents — people too young or too old to work. This is the ratio that's been the focus of the federal government's various Intergenerational Reports. But asking about the dependency ratio is the wrong question. It obscures the issue of who's creating the wealth in the first place. It doesn't matter how big the working population is if everyone is working for the government.
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